SAAS Remains Tough Government Sell

Federal agencies are reluctant to taste what private enterprise is gobbling up.

WASHINGTON - Despite the endorsement of one of the government's top-ranking technology officials, software-as-a-service vendors still face a tough battle trying to crack the federal agency market.
SAAS (software as a service) continues to grow in the private sector as a popular cost-saving alternative to buying software, but government agencies are hamstringed by worries of inadequate security and privacy, bureaucratic mindsets and lack of data standards.

As INPUT's Richard Colven told the SaaS/GOV 2008 conference Jan. 16, "It will take committed, brave technical vendors" to sell SAAS to government agencies. Equally, Colven added, "It will take a very brave procurement officer."

Describing the government SAAS business as a nascent market, Colven nevertheless said his company's surveys of federal agencies show "SAAS is coming down the road. SAAS would seem to be a high attraction given [agency] attrition and constrained budgets."
Or, as Curt Kolcun, vice president of Microsoft's federal division, told vendors, "The world is going to software plus services." Colven added that "It's not a matter of if, but when" federal agencies start using SAAS.
"The market is getting ready to take off," Colven said. "It will start slowly because customers are not comfortable with it yet."
To help push reluctant agencies further down the road to SAAS, Karen Evans, administrator of the Office of Electronic Government and Information Technology at OMB (Office of Management and Budget), pointed out the government needs to embrace more service-oriented software models.
"We can't continue to maintain all of the things we have," Evans said. "We have to start shutting down some of our legacy systems."
In a panel discussion on why agencies are reluctant to embrace SAAS, Fred Schobert, CTO of the General Services Administration, warned SAAS is a "little bit difficult to sell as pay-as-you-go. [Agencies] want to be able to predict expenses."
But Annesh Chopra, secretary of technology for the Commonwealth of Virginia, said SAAS would be a "lynchpin in our strategy moving forward. I actually don't sweat much over licensing fees. I sweat over development costs. It takes time and effort to build applications."
Chopra said SAAS can be a critical factor in the cost of agency software development. "Apps can come online faster," he said.
Fred Schobert, CTO of the General Services Administration, added, "Nobody wants to develop software from scratch. The GSA is not in the business of developing software."
The OMB's Evans agreed. "Our track record is clear -- we are not very good at delivering our own software in the time-frame set," Evans said. "We're also not very good at managing large projects."